Judge Denies Venue Change for International Paper Fee
Suit

August 29, 2007 (PLANSPONSOR.com) - A judge in the
U.S. District Court for the Southern District of Illinois has
denied a request by International Paper Company to have an
excessive 401(k) fee suit brought against it moved to a
Tennessee federal court.

U.S. District Judge David R. Herndon pointed out in
his opinion that International Paper argued for
moving the case from the Southern District of
Illinois to the Western District of Tennessee because the
company is headquartered in Memphis and records relevant
to the case are there. Herndon said the fact that
documents relevant to this case are outside the district
is not a factor weighing heavily in favor of transfer and
cited another case which said, “Documents and
records are usually not a very persuasive reason to
transfer a case . . . . They are easily
transportable.”

International Paper also argued for the venue
change because the defendants live in the Western
District of Tennessee. The court said the purpose of a
change of venue is not to shift inconvenience and expense
from the moving party to the non-moving party. Herndon
again cited another case which concluded, “[W]hen
the inconvenience of the alternative venues is comparable
there is no basis for a change of venue; the tie is
awarded to the plaintiff.”

A motion for class certification was also presented
to the court by the plaintiffs. Herndon delayed ruling on
the request pending the outcome of an appeal before the 7
th
U.S. Circuit Court of Appeals which argues that Section
404(c) of the Employee Retirement Income Security Act
(ERISA) does not defeat the commonality and typicality
requirements for class certification. International Paper
argued that because its plan is a Section 404(c) plan
allowing participants to choose their individual account
investments, it is not liable as a fiduciary for those
individual participant decisions.

According to the opinion, “[T]he Court believes
that it would be imprudent to proceed further on the
matter of class certification until the appeal is
resolved.”

International Paper was one target of a number of
lawsuits filed last year alleging plan fiduciaries
breached their duties under ERISA by failing to contain
plan costs and paying unreasonable fees to plan service
providers. In addition, International Paper is charged
with failing to minimize costs associated with investment
in employer securities under its plans and holding a
portion of plan assets in cash. Lawyers for International
Paper Company filed documents with the court in May
claiming the company did nothing wrong (See
IPC: 401(k) Fees ‘Not Excessive or
Unreasonable’
).